Ramsgate Victoria Hotel v Montefiore (1866) LR 1 Ex 109

The defendant, Mr Montefiore, wanted to purchase shares in the complainant’s hotel. He put in his offer to the complainant and paid a deposit to his bank account to buy them in June. This was for a certain price. He did not hear anything until six months later, when the offer was accepted and he received a letter of acceptance from the complainant. By this time, the value of shares had dropped and the defendant was no longer interested. Mr Montefiore had not withdrawn his offer, but he did not go through with the sale.

Issues

The complainant brought an action for specific performance of the contract against the defendant. The issue was whether there was a contract between the parties after the acceptance of the original offer six months after it was made.

Held

The court held that the Ramsgate Victoria Hotel’s action for specific performance was unsuccessful. The offer that the defendant had made back in June was no longer valid to form a contract. A reasonable period of time had passed and the offer had lapsed. The court stated that what would be classed as reasonable time for an offer to lapse would depend on the subject matter. In this case, it was decided that six months was the reasonable time before automatic expiration of the offer for shares. Yet, for other property, this would be decided by the court in the individual cases.